Everything You Must Know About Charitable Solicitations

Nonprofits may get lucky and receive a donation without asking, but most gifts to your organization come from an event, face-to-face meeting, mail, email, or other online campaigns. Each of these fundraising types is also known as a solicitation, and nonprofits that include them in their activities often must register with their state to retain…

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Everything You Must Know About Charitable Solicitations

Nonprofits may get lucky and receive a donation without asking, but most gifts to your organization come from an event, face-to-face meeting, mail, email, or other online campaigns. Each of these fundraising types is also known as a solicitation, and nonprofits that include them in their activities often must register with their state to retain tax-exempt status.

This article discusses why nonprofits need solicitation, why and how they must register with their state, and the results if your nonprofit doesn’t register.

  1. What are Charitable Solicitations?
  2. Must Your Organization Register Before Soliciting Donations?
  3. How Do You Solicit Donations?
  4. How Do Nonprofits Register Before Soliciting?
  5. Identifying Registered Organizations
  6. Are There Any Exceptions?
  7. What Happens if You Don’t Register?

What is Charitable or Donation Solicitation?

When you make an ask for a donation to a person, a group of people, or to the public at large, at a fundraising event, via communications pieces, or calls or in-person meetings, this ask is called a charitable solicitation. To make a charitable solicitation, every nonprofit organization must register with its respective state.

Nonprofits often receive unsolicited donations as well. Since in these cases, no asks were made to anyone, these donations should not yet become a problem for unregistered nonprofits.

Charitable solicitation and fundraising are often used interchangeably because they mean the same thing to the Internal Revenue Service (IRS) and most states.

Typical forms of charitable solicitation are:

  • Face-to-face meetings with major donors and corporate sponsors
  • Email and mailed donation appeals
  • Solicitation letters
  • Fundraising calls
  • Social media posts
  • Website content, donation pages, and donation forms
  • Events
  • Digital or newspaper ads

Must Your Organization Register Before Soliciting Donations?

The quick answer to this question is yes, but it really depends since registration is done with the state. Organizations must register in each state before they solicit donations.

For example, there may be cases when a gift appears from out of state. In this case, you do not have to register, but be careful what you include in your acknowledgment letter. If you send your general thank you letter with a call to action for donations, this is seen as a form of solicitation. Since you haven’t yet registered with that state for charitable solicitation, this is not acceptable.

How Do You Solicit Donations?

charitable solicitation

In an ideal world, people would look for nonprofits based on their passions and donate without ever being solicited. Unfortunately, this is rarely the case, and solicitation and fundraising are necessary for every nonprofit.

Once again, we’re back in the ideal world where everyone you solicit will give, but solicitation or the “ask” is the final step in a long process. One of the best ways to solicit donors is by developing a moves management plan for each donor type.

Nonprofits often use moves management to solicit major donors, but you can create a moves management strategy for any donor type. This plan helps you create a systematic process that breaks down steps for fundraisers to take during each stage of a donor relationship.

1. Segment donors

The first step in this process is to segment your donors into smaller groups based on their interests and giving ability. Once you have segmented your donors, you must create a plan that includes contact points, marketing pieces, and other communication.

Choose an online fundraising tool that helps you with donor management. This will ensure you have everything in one place. For example, Donorbox helps nonprofits manage donor records, and segment them based on location, giving frequency, donation amount, number of donations, campaigns, etc. Here’s a glimpse into the feature.

charitable solicitation

2. Create personalized communication plans

Segmentation of your donor records will help you learn what programs interest the donor and how much they are able and willing to donate. Knowing this information gives you a better chance of getting the response you want. Depending on the data, you need to prepare personalized and targeted communication plans for all donor groups.

For example, those who have given just once would need a different approach from those who have been giving for a long time at irregular intervals. Similarly, your potential major gift donors will need to be approached in a completely different and more planned manner.

Each communication piece you design – be it emails, an appeal letter, fundraising scripts, or social media ads – should be primed to have a targeted approach to your audiences. Your donor relationships are the most crucial aspect you should take care of before making the ask.

3. Make the ask

Donation requests should be the final step in relationship building with your donors.

Just remember, the ask should not be done by itself. Do your best to share your organization’s mission and purpose, include details on programs, and how donor gifts make a difference to beneficiaries.

When you’re ready to develop your ask, you can use the following tips in most situations.

  • Create an online campaign or use your existing donation page
  • Use a donation form that’s easy to give with
  • Add different payment options to your giving process
  • Include a bold subject line or hook in all your communication pieces
  • Explain why you need the funds, your mission, and your organizational impact
  • Keep the case statement and impact report handy
  • Use donor segmentation data to create a few suggested donation amounts
  • Create fundraising scripts before having staff make solicitation calls
  • Say thank you irrespective of the response
  • Have your letters and emails signed by the Executive Director or Board Chairperson

How Do Nonprofits Register Before Soliciting?

41 out of 50 states and Washington DC require nonprofits to register before soliciting donations. Some state laws also require nonprofits to publish their registration to build trust and transparency. Currently, Nonprofits do not have to register in Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, Vermont, and Wyoming. Arizona also does not have registration requirements unless you are a veteran organization.

Other states have rules for donation solicitation. The IRS tries to provide information on state registrations, but the best way to start the process is by contacting your state for details. Many nonprofits prefer to outsource this task to a law firm that has the expertise to handle state registration forms and respective state laws.

Requiring nonprofits to register allows states to keep better track of organizations and ensure they’re sticking to their tax-exempt missions. Some states have tried to streamline registration, but most would rather keep their old rules than simplify things. These states also have strict rules for disclosure statements. Nonprofits must publish these disclosure statements but they also have to ensure that they follow the rules for writing these documents.

One way states have made it easier is by expecting many of the same items. In many cases, nonprofits must send a few necessary items to the State Attorney General or Secretary of State who manages the state charities bureau. Let’s have a look at them.

What will your state need for registration?

Your state’s registration requirements include the following registration forms, lists, and documents:

  • IRS Form 990
  • Nonprofit Bylaws
  • Articles of Incorporation
  • Letter of Determination
  • List of officers, directors, and trustees
  • Audited financial statements
  • Contracts with solicitors and consultants
  • Disclosure statements

After registering with your state, you may not be done. Many states require a 501(c)(3) to renew their solicitation registration regularly. Even those states that do not require nonprofits to register may want your organization to file an annual report with financial details.

Identifying Registered Organizations

Nonprofit organizations that register for charitable solicitation receive a unique state registration number from their states. This works as an identifier for organizations permitted to solicit donations. You must keep this documentation stored for future reference. However, there are other states like Virginia that prefers to use the EIN of the nonprofit as an identifier.

Are There Any Exceptions?

Some states have created exceptions for churches or religious organizations, educational organizations, and those that are memberships-based. The following resources will give you a better understanding –

Having said that, it is advisable to always check with the state and take expert help before making a decision.

What Happens if You Don’t Register?

charitable solicitation state requirements

Solicitation registration is relatively straightforward for most nonprofits. The process can take a few months, but you don’t have to worry once you’re done, right? You can solicit donations and fundraise without any objection or risks. However, the problem arises when your nonprofit fundraises nationally.

Registering with a state can be costly and time-consuming, especially if you need to go through the process 42 times. In some cases, national organizations may not be aware of these state requirements, and the results of not registering are devastating.

If your nonprofit fails to register before soliciting donations, you may be in danger of:

  • Fines and late fees
  • Your board members and executive directors can be held responsible in civil and criminal court
  • You may lose your organization’s tax-exempt status
  • Your nonprofit may lose the right to solicit funds or to conduct fundraising activities in the future
  • You may have to return donations and grants you’ve already received

States take these laws seriously, and with more people paying attention to nonprofits’ actions, they are becoming stricter with these requirements. Being unaware of these requirements does not get you off the hook. These results can happen even if you did it unintentionally.

Hence, it is advisable to register with your state for donation solicitation right while you’re working on starting your nonprofit. If you have intentions of soliciting donations from other states, you should take expert help to understand the right way to address this snag.

Final Thoughts

Registering your nonprofit with your state can take weeks, even months, but it is a requirement most organizations cannot avoid. Since unsolicited donations are few and far between, a 501(c)(3) must go through the legal process to register and create long-term fundraising plans for each donor type.

Charitable solicitations and fundraising are all about relationships. To ensure donors stay happy and involved, nonprofits must invest in quality equipment.

Donorbox gives nonprofits an affordable option to collect online donations and keep track of their donors. Our features such as Crowdfunding, Peer-to-Peer fundraising, Text-to-Give, Memberships, Events, Recurring Donations, etc. can help you move to the next level in fundraising. Learn more here.

Unleash your nonprofit’s full donation potential with Donorbox Premium – get fundraising coaching, a dedicated account manager for your nonprofit, high-performance tools, and priority support.

Find helpful tips and resources on our Nonprofit Blog to raise more funds and manage your nonprofit better. Subscribe to the Donorbox newsletter to receive a curated list of our best resources delivered to your inbox every month.

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Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.

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